THE UPPER TRIBUNAL	Appeal No.  CIS 2761 2008
ADMINISTRATIVE APPEALS CHAMBER

LH v SSWP (TC)

DECISION

The appeal is allowed. For the reasons below, the decision of the tribunal is set aside. I refer the appeal to a new tribunal to decide the appeal again in accordance with the following directions. 

Directions for new hearing

A	The new hearing will be at an oral hearing. 

B	The new tribunal should not involve any judge or other member who has previously been a member of a tribunal involved in this appeal.

C	The appellant is reminded that the tribunal can only deal with the appeal as at the date of the original decision under appeal. 

D	Both the Secretary of State and the appellant are directed, within one month of the issue of this decision, to provide the tribunal with all evidence in their possession, power or control, about any entitlement decision made with regard to the appellant’s claim for working tax credits in 2005-06, any claim made by the appellant for working tax credits in 2006-07, any award or other decision made about any such claim for that year, and any other communications between the appellant and the Tax Credits Office about payment of tax credits to the appellant on or after 6 April 2006. If the parties have any further written evidence to put before the tribunal, this should be sent to the tribunal within one month of the issue of this decision. 

E	The Secretary of State is directed either to ensure that there is a representative at the hearing with proper instructions about the various official documents and screenprints questioned in the reasons below or that a full written submission is given to the tribunal before the new hearing.

These directions are subject to any later direction by a tribunal judge. 

REASONS FOR DECISION

1	This is an appeal against a First-tier Tribunal decision on 30 08 2007 about the effect on the appellant’s claim for income support of his receipt of working tax credit (WTC). Several factors served to complicate this appeal and delay it. There was confusion in the submissions about the differences between awards of WTC and entitlement to it. There was confusion about what decisions had been taken. The case was then stayed pending decision by another judge of the Upper Tribunal of a similar case. That was itself delayed but has now been decided. The parties have expressed views on the application here of that decision.

Background to the appeal 
2	H claimed income support on 7 3 2006. He declared an award of WTC and child tax credit for the year from 6. 4. 2005. A decision was made on 27 03 2006 taking WTC into account. However, later events suggest that he should not have been paid WTC at that time, and the WTC then in payment was regarded as an overpayment. Following this, on 29 06 2006 H informed his Jobcentreplus that his WTC was suspended. The Tax Credit Office confirmed payment of WTC to 14 06 2006. As a result H’s income support entitlement was recalculated, removing WTC from 20 06 2006. This increased the income support payable from that date. It did not backdate the increase to reflect repayment of the previously paid WTC.  

3	On 3 10 2006 a representative asked that H’s entitlement to income support be revised to allow full payment of income support from 20 02 2006. The ground for the request was ignorance of a material fact. In an appeal notice dated 21 12 2006 H asserted: “You deducted WTC from my entitlement even though I was not entitled. I had notified tax credits of my change but they took until June to make their adjustment … it is even more unjust that you will not give me a written decision so I have no option but to appeal and ask a tribunal to rescue this injustice.” According to the official submission made to the First-tier Tribunal, on 29 01 2007 it was decided for the Secretary of State that arrears of income support were not payable to the appellant (H) from 27 02 2006 to 14 06 2006 “because payment of WTC must be taken fully into account”.

4	The papers contain one of the least helpful LT54 decision forms I have seen. It is an undated, unsigned request for reconsideration of an unspecified decision made by an adjudication officer (an office abolished a decade before). A named officer (I assume, as she also failed to sign the form) reconsidered the decision on 29 01 2006 (corrected to 29 01 2007 manually) but made no change. The decision was “See A6 for full decision”. The A6 is attached. As the form itself says, it is not intended for decisions. Perhaps because of that it is not clear what decision the officer decided not to change. There is no evidence on the form that the officer dealt directly with the formal request for revision. More helpfully a letter of the same date told H that “… I have done a reconsideration of the original decision. The decision has not gone in your favor. Arrears of Income Support are not payable as our guidance states that we are unable to pay arrears even though Inland Revenue will recover the overpayment”. (The Inland Revenue had then, like adjudication officers, been consigned to history.)

The tribunal decision
5	There is then nothing in the papers until the decision of the tribunal on 30 08 2007. 
The tribunal’s decision reads:

	“Appeal is disallowed

	The decision of the Secretary of State issued on 29 01 2007 is confirmed.

	The material facts of the case are not at issue and I find them to be in accordance 	with section 4 of the appeal submission.

   	It was not the Appellant’s fault that WTC was paid after he became incapable of work
	And the decision to recover it, made by HMRC, is not a matter for me. WTC is to be 	taken into account in deciding entitlement to income support, even though being 	recovered, until its cessation.

	This issue has been decided by higher authority in CIS 0647 2007 following the 	principle in Leeves v CAO r/a R(IS) 5/99.”

There is no record of proceedings or statement of reasons on file to explain matters further. Nonetheless, the judge below later granted permission to appeal on a late application for H, considering that the decision notice contained the reasons. 

6	The tribunal plainly failed to deal with H’s challenge in his appeal notice about a material fact, namely when he told the Tax Credits Office of his incapacity. Section 4 was incorrect because in paragraphs 4.7 and 4.8 it refers to a decision not to revise. No such decision had been taken. The tribunal decision, in repeating those errors, is itself in error. There has to date been no specific consideration by a tribunal of the date on which H first told the Tax Credits Office that he was no longer entitled to WTC. The Secretary of State now supports the appeal on this ground. It is common ground that the tribunal decision should be set aside. I need consider it no further. 

The decision under appeal
7	   There has been no proper consideration by a tribunal of the application to revise the original decision awarding income support to H. There is a curious letter on 15 04 2008 – a year after the tribunal decision – thanking H’s representative for his application to revise the decision on 29 01 2007 and stating that the application is refused. H was offered a right to appeal. He did appeal. This appeal was refused by the First-tier Tribunal on the grounds that it had already decided the matter. However, the judge dealt with it by granting late permission to appeal the previous decision. That, if I may say so, is a pragmatic but fair solution to the problem of whether the letter of 15 04 2008 had any validity.  

8	The letter of 15 04 2008 was clearly far too late to be of relevance to this appeal, so is to be ignored.  From the screenprints in the papers, the operative decision in question is a decision of 7 07 2006 superseding the previous decision awarding income support to H following his claim on 27 02 2006. The issue is whether there should be any revision or supersession of that supersession of the original decision made on 27 02 2006 on the claim.

The contended facts
9	 There are a number of unresolved issues of fact. Why did H tell the Jobcentreplus of his entitlement to WTC when he made his income support claim if, as is suggested by evidence before me, he had already stopped having any right to receive it? He has to date only produced the award to him of child tax credit and WTC for the year 6 04 2005 to 5 04 2006. The letter of award records that H worked 16 hours or more a week. It warns H to tell the Tax Credits Office if his hours change or he stops work. It predates the time when it appears that H stopped working. 

10	H told the Jobcentreplus on 29 06 2006 that his WTC had been suspended. This is confirmed by the relevant screenprint. This led to the local office referring the matter elsewhere and to the decision on 7 07 2006. The next relevant evidence in the papers is a note on the form A6 referred to above, with information dated 29 01 2007 that:
	“IR states their system only shows customer contacted them once to stop his WTC 	award. He contacted them 13 6 06 and authorise local authority to speak on his 	behalf – it was then reported that cust ceased work 22 2 06. His WTC award stopped 	straightaway and o/p now being recovered. “

11	The papers now contain an official calls schedule showing that H made a telephone call on 3 03 2006 about his WTC advising that he had been sick “since Feb 06”, and indicating that he was “advised apps tax credits will not change as apps income is still within income threshold”. If this is correct, then the “IR” information recorded by the Jobcentreplus was wrong or misleading. The final submission for H from his representative in this appeal comments that “as documented in the telephone record from Tax Credits expressed his desire not to receive the moneys”. Did it? Did H receive advice that may explain why H declared his WTC when he made his income support claim although at least arguably he may already have lost his right to claim WTC at that time? 

12	There is also a curious and unexplained entry against 5 04 2006 on the screenprint produced for the Secretary of State that records:

	“Custr off work sick so ent to receive WTC”.

Was this a note of a conversation between the local Jobcentreplus and H and if so was this a note of advice given to H, and if so by whom?

13	This decision is concerned only with errors of law and not with making necessary findings of fact. The new tribunal to which I refer this appeal needs to consider the evidence now available and these or similar questions. If, as is now contended for H, H did tell the Tax Credits Office on 3 03 2006 (a Friday) of his sickness and that the delay in dealing with his WTC entitlement from that date was not due to any failure on H’s part to inform the Office that he was no longer working, then a number of points arise. That is also the case if, as these records may suggest, H was given official advice about his position and acted on it.  

The law
14	The first point that must be emphasised is that it is necessary in cases like this to distinguish between awards of tax credits and entitlement to them. Both parties have confused awards and entitlement in their submissions on this appeal. That does not surprise me. In my experience there is repeated confusion in practice about awards of tax credits (made before or during the year in which payments are made) and decisions confirming entitlement to credits (only confirmed after the year in question), and the annual nature of both decisions. See Tax Credits Act 2002 sections 14 (initial decision awarding credit) and 18 (decisions after final notice). That confusion is widespread. It is not assisted by the HMRC practice of calling the section 18 notice a final award notice (see http://www.hmrc.gov.uk/taxcredits/payments-entitlement/entitlement/check-award.htm).
The section 18 notice is not an award notice; it is an entitlement notice. 

15	The importance of this is not least in the confusion it clearly causes other public authorities when trying to apply their own rules to tax credits. Here the relevance is because of regulation 31(3) of the Income Support (General) Regulations 1987:

	“Working tax credit or child tax credit shall be treated as paid –
	(a) where the award of that tax credit begins on the first day of a benefit week, on that 	day, or
	(b) on the first day of the first benefit week that follows the date the award begins, or
	(c) on the first day of the first benefit week that follows the date an award of income 	support begins, if later, 
	Until the last day of the last benefit week that coincides with or immediately follows 	the last day for which the award of that tax credit is made.”

Awards of, and entitlement to, income support arise together. Awards of tax credits are separated from entitlement to those tax credits, often by more than a year. This regulation is concerned only with awards of tax credits. I add for completeness that regulation 31 is to be read with regulation 32 and the decision of (then) Commissioner Mesher in CIS 1064 2004. However, that decision was not concerned with entitlement notices or with awards for more than a single year.  

16	There is a similar provision to regulation 31(3) in regulation 96(3) of the Jobseeker’s Allowance Regulations 1996. Regulation 32 of the Housing Benefit Regulations 2006 applies “where a claimant receives a tax credit”. Similar language is used in regulation 22 of the Council Tax Benefit Regulations 2006. All these provisions are concerned with payments, presumably under awards, and not entitlement. Behind all these regulations is a more fundament question, posed by the authors of CPAG’s Housing Benefit and Council Tax Benefit Legislation, 22nd edition 2009/10 at page 345: are all payments of tax credits income? I must return to that below. 

Application to this appeal
17	The only evidence about WTC in these papers is that H was awarded WTC for the year from 6 April 2005. There is no evidence of his entitlement for that year. There is no evidence of any award from 6 April 2006. However, given the points above, it is not surprising both that H’s representative submitted that H was entitled to tax credits when he probably was not, and that the local Jobcentreplus, the officers to whom that office referred the files, and the officer making the initial submissions for the Secretary of State all failed to distinguish between awards and entitlement or to note the significance of the end of one award year, and the start of another, on 5-6 April 2006.

18	This raises a second point. The relevant year of award for tax credits both when they were claimed and when the income support was claimed was the year 2005-06. This ended on 5 April 2006. The new evidence suggests (I make no finding) that H told the Tax Credits Office he was no longer entitled to tax credits before 5 April 2006. And he may have told Jobcentreplus on 5 April 2006 (depending on what the screenprints mean). There is nothing in the papers dealing with any award of tax credits from 6 April 2006, or the action that is required to be taken by HMRC under section 18 of the 2002 Act with regard to entitlement to tax credits in the year 2005-06. For example, did H actually claim WTC for or in 2006-07? If H told HMRC before the start of the 2006-07 year by H that he was not working, why did HMRC go on paying WTC for the period after 6 04 2006. There is no direct evidence in the papers that any award was made for 2006-07. It seems to have been assumed that as H went on being paid WTC, he had been awarded it. Was he, or was this an official error?  

19	That raises a further point, on which I have no submissions, about whether HMRC has the power to make a valid award of tax credits to someone during a new tax year if that person told them before that year starts that he or she does not qualify. Did H make any claim for that year? Did the claim predate or postdate anything he told the Tax Credits Office on 3 03 2006? If there was no award, or no valid award, then it is arguable that any sums received were not received because of an award of tax credits of a nature that falls within regulations 31 and 32 of the Income Support (General) Regulations. If so, to ask the question asked in the CPAG volume, is this income? 

20	This appeal cannot be taken further without further evidence and findings of fact. It may need further submissions on the law once those facts have been established. I also emphasise that this decision makes no findings of fact. I have raised the question on the evidence before me whether H informed the Tax Credits Office on 3 03 2006 that he was not working. I have raised the question whether the event on 5 04 2006 was relevant to this. If so, and the evidence is at present not consistent, then the Tax Credits Office knew before the start of the 2006-07 year that H should not be receiving WTC. I have no evidence about any claim or award for 2006-07 or what action was taken by either H or the Tax Credits Office with regard to the final notice for 2005-06. It is not clear if what was paid to H in 2006-07 was based on an award of WTC, valid or otherwise, or was in that sense income. I must leave those matters to be considered on the facts by a new tribunal.  

My decision 
21 	I was asked for the Secretary of State to apply the decisions of the Commissioner in CIS 1813 2007, as confirmed by the decision of Judge Jacobs in CIS 1853 2008, to this decision. The first of those two decisions was based on the fact that in that case there was a repeated objection by that claimant to the continued payment of tax credits. The second was a decision without full reasons based on a concession and agreement between the parties. I see no ready basis to apply those decisions here without making further findings. There is a key difference here as the evidence now stands. This is that there is no evidence in this appeal of any claim for, or award of, working tax credit after 6 April 2006. So there is at present no basis on which to consider a concession. 

22	This appeal must go back for rehearing. To avoid the earlier confusion, I direct that, unless either party produce additional evidence to clarify the issue further, this be treated as an appeal against a decision not to revise or supersede the award of income support to H originally made following his claim (according to the screen prints on 27 03 2006 and according to the form on 27 02 2006) as superseded on 7 07 2006. It is for the tribunal to consider all the evidence and make its own findings of fact, but I suggest that the following may need clarifying:

(a)	 When H signed the claim form for income support on 2 03 2006 was he then working as stated in the form?
  
(b)	Did H inform the Tax Credits Office on 3 03 2006 that he was no longer working because of sickness? What advice, if any, was given in the telephone call scheduled as taking place that day?

(c)	What is the significance of the screen print entries for 27 03 2006 that “N/c claiming as sick IB credits only” and “New/repeat claim Non O/bk”. Was that the decision on the claim received on 3 03 2006? 

(d)	What happened to cause the screen print entry on 5 04 2006?

(e)	Was H awarded working tax credit for 2006-07 or child tax credit only? If he was awarded WTC, when was it awarded and what decisions were taken to stop that award?

(f)	What actions were taken by the Tax Credits Office and H with regard to the final notice/entitlement for the 2005-06 tax credits year?

(g)	Did H, as contended for him, ask not to be paid the WTC after he gave notice that he was no longer working? 

23	I have given specific directions to both parties to produce all evidence available on these issues. If either party has any problem gathering the evidence within the required time then that party must apply to the district judge below to vary the directions. I give both parties notice that if without such application a party fails to provide the information required then the tribunal may proceed to decide the appeal making any adverse inference it considers appropriate from the absence of that evidence.

24	Finally, I must make it clear that Her Majesty’s Revenue and Customs, the government department responsible for the Tax Credits Office, is not a party to this appeal. Any issue that H wishes to raise about that office and its decisions must be raised with them or with the Adjudicator that deals with complaints about administration of tax credits.   

David Williams
Upper Tribunal Judge
10 08 2010

[Signed on the original on the date stated]